Com­mis­sion charges HSBC, JPMor­gan, Credit Agri­cole with rate-rig­ging

Financial Mirror (Cyprus) - - FRONT PAGE -

Euro­pean Union an­titrust reg­u­la­tors charged Europe’s big­gest bank HSBC, US peer JPMor­gan and France’s Credit Agri­cole on Tues­day with rig­ging fi­nan­cial bench­marks linked to the euro, ex­pos­ing them to po­ten­tial fines. The Euro­pean Com­mis­sion also said it would charge bro­ker ICAP soon for sus­pected ma­nip­u­la­tion of the yen Li­bor fi­nan­cial bench­mark, the EU news and pol­icy site Eurac­tiv re­ported.

US and Euro­pean reg­u­la­tors have so far handed down some EUR 4.4 bln ($6 bln) in fines to ten banks and bro­ker­ages for rig­ging the Lon­don in­ter­bank of­fered rate (Li­bor) and its euro cousin Euri­bor, while prose­cu­tors have also charged 16 men with fraud-re­lated of­fences.

“The Com­mis­sion has con­cerns that the three banks may have taken part in a col­lu­sive scheme which aimed at dis­tort­ing the nor­mal course of pric­ing com­po­nents for euro in­ter­est rate de­riv­a­tives,” the EU com­pe­ti­tion author­ity said.

The three banks and ICAP, which re­fused to set­tle the case in De­cem­ber, could face penal­ties of up to 10% of their global turnover if found guilty of breach­ing EU an­titrust rules.

JPMor­gan said the EU charges were with­out merit and that it would de­fend it­self, while Credit Agri­cole said it would ex­am­ine the charge sheet. HSBC said it would de­fend it­self vig­or­ously. ICAP could not im­me­di­ately be reached for com­ment.

In De­cem­ber, a record ?1.7 bil­lion euro fine was levied on six banks in­clud­ing Deutsche Bank, Royal Bank of Scot­land and Cit­i­gro six banks in­clud­ing Deutsche Bank, Royal Bank of Scot­land and Cit­i­group for sim­i­lar of­fences. The lenders set­tled their charges and re­ceived a 10% cut in their fines.

“In the com­ing days or weeks, we will prob­a­bly is­sue a new state­ment of ob­jec­tions against the bro­ker (ICAP),” Com­pe­ti­tion Com­mis­sioner Joaquín Al­mu­nia told a news con­fer­ence.

He also said reg­u­la­tors have yet to de­cide on the next step of an on­go­ing in­ves­ti­ga­tion into sus­pected rig­ging and col­lu­sion in the tril­lion-dol­lar for­eign ex­change mar­ket, the world’s big­gest mar­ket­place.

“We re­ceived lots of in­for­ma­tion and we are look­ing into this in­for­ma­tion...We are not yet at this mo­ment when I can an­nounce steps of this case,” he said.

Al­mu­nia can choose to open a for­mal in­ves­ti­ga­tion into the case or keep things un­der wraps if enough banks de­cide to set­tle any charges and only an­nounce a de­ci­sion at the end.

More than 30 for­eign ex­change traders at many of the world’s big­gest banks have been put on leave, sus­pended or fired as the forex probes in the var­i­ous coun­tries ex­pand.

The probe fo­cuses on ac­tiv­ity re­lated to the key for­eign ex­change bench­mark, known as the WM/Reuters fix, which is tied to sev­eral ex­change rates in­clud­ing the euro, ster­ling, Swiss franc and yen set daily in Lon­don.

These are com­piled us­ing data from Thom­son Reuters and other providers, and are cal­cu­lated by WM Com­pany, a unit of State Street Corp, and are im­por­tant be­cause they are used as ref­er­ence rates for tril­lions of dol­lars worth of in­vest­ments, trade and cor­po­rate deals around the world.

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